To be a former franchisor, and needing franchised my company for over 10 years before I sold it, it seems for me that I’d experienced concerning possible scenario. Most people believe franchising is really cut and dry; you have a franchise agreement, people pay most people a certain amount to purchase their franchised outlet, and then they run the business or store to get a 10 year term by means of automatic renewals.
This is a serious concern, and it happens on a regular basis than people realize. Franchisors need to demand that the proper procedures are followed, otherwise you run into all sorts of scenarios. Please consider all this and think on.
That really doesn’t happen with franchising, and although franchising is an extremely successful business design for distributing goods, services, and products; it isn’t Disneyland. I doubt any business really is.
You see, in the franchise deal there are stipulations before you transfer the business to someone else, the brand new franchisee has to then indicator the latest franchise agreement, plus they have to be approved by the franchisor. It turned out the brother-in-law was not running the business down to our confidential operations manual, he had made quite a few changes.
Yes, who sounds like a decent business model, however nothing is ever as simple as it appears in the franchising industry. Let me explain. Over time, I don’t think I ever had a perfect franchise sale when everything went exactly correctly; where the franchisee qualified designed for the loans very quickly, possessed a perfect resume, had a wonderful location, didn’t care to negotiate any terms in the franchise agreement, and all sorts of things went perfect during the a decade’s they were in business prior to renewal.
One day, I occured to fill in for one our area representatives in that location, and I went to visit the franchisee on the Georgia area. When I got there, We were talking to his brother-in-law. Apparently he was now running the business, and some of our franchisee had transferred the market to him without agreement.
Worse, this individual wasn’t following the proper techniques which were part of a large fast account we had with a national company. Again because this individual didn’t have to follow are actually confidential operations manual, that he never read considering as he said; “I never signed nothing. inch Nor did he ever go to our franchisor training, which is also required from new managers which are going our franchised business model, in case the owner is not involved in the day-to-day operations.
I explained to him that he had to run the business a clear way, and he proclaimed that I was wrong, because he didn’t sign any sort of agreement, and he would definitely do it his way. Oh great I thought, today I have a rogue franchisee on my hands, and they’re not keeping with the uniformity of our brand name.
Let me give you a good example of a crazy thing which usually happened to us. We a franchisee who lived on the border of Ga and Alabama. We allowed them to have a joint territory in both states. As a consequence of type of industry we took part in there were different regulations on each side with the border.